The Ministry of National Development acknowledges and will respect the European Commission’s decision ruling certain loans and capital increases granted to Malév between 2007-2010 as prohibited government aid. The ministry has prepared various scenarios for managing the situation, which will be updated and finalised with knowledge of the accurate content of the decision. The Government is expected to discuss the ministry’s recommendations regarding Malév’s future at its 16 January 2012 session. The operation of a national airline centred in Budapest and ensuring efficient enforcement of the national economic interests remains a priority objective. Maintenance of Malév’s uninterrupted operation is indispensable for the implementation of this effort.

Repeating the assumptions included in its December 2010 decision to launch the procedure, the European Commission has concluded that certain support measures implemented between 2007 and 2010 were incompliant with the internal market. The Hungarian authorities must take all required steps to efficiently execute the order to repay the grant amounts. In addition to the performance of these obligations, in the next few weeks the Government and the ministry will adopt and outline an action package to handle the situation in a reassuring manner.

In the opinion of the Ministry of National Development, the decision adopted by the European Commission is a direct corollary of the failure by the previous governments and Malév managements to undertake the company’s long overdue restructuring. For lack of long-term plans for the solution of sustainable financing and operation, and as a result of using up valuable assets as well as the improper privatisation, the airline company was set on an inescapable path. In addition to the budget effects of renationalisation, the Bajnai government also shifted the financial and political responsibility of managing the situation to the incumbent administration. The White Paper giving a summary of the omissions and abuses performed in the recent past can be downloaded from the government’s website. Based on the facts revealed by the Ministry of National Development, Gyula Budai, Commissioner for the Investigation of Businesses Affecting State Property will make several police reports against unknown perpetrators in certain cases described in the said document.

Following the change of government, damage assessment, company screening and the search for possible partners started without delay, and negotiations with a strategic investor are in progress. Thanks to the recently taken actions, Malév’s operational and trade statistics have shown outstanding improvement, and the trend continues. The Government and the ministry will do their best to sustain the airline’s uninterrupted operation.

The Malév group employs 2600 people and has regular contractual relations with 500 Hungarian businesses. Directly and indirectly, the airline contributes approximately HUF 70 billion per year to the revenues of the central budget. Its revenues, partly generated abroad, raise the company among Hungary’s most significant exporters. It also provides 40 percent of the turnover transacted through the Budapest Airport. Malév transports nearly 3 million passengers on 23,000 pairs of flights per year, and flies planes directly to 45 destinations. Its existence is one of the fundamental factors of foreign project and investment decisions and reinforces the country’s regional role. In view of all these, the Government thinks that a national airline centred in Budapest is inevitably required, and to this end it will take action in the immediate future, without delay.

(Ministry of National Development , Department of Communication)